Founder of Alpha Finance Lab: Analyzing Product Features, Operating Processes, and Development Plans

This article was published on DeFi Dao, author: Nick Sawinyh, translated by Pingfeng.

This article is an interview with Tascha Punyaneramitdee, the founder of Alpha Finance Lab, who discusses leveraged liquidity mining products and the next steps for Alpha Finance Lab.

Hello! Who are you? What is your background and what are you doing?

My name is Tascha Punyaneramitdee, co-founder and project lead of Alpha Finance Lab. I studied economics at the University of California, Berkeley, and started my career in San Francisco before working as a tech investment banker in London. Previously, I worked on the product management team at Tencent in Thailand, then joined Band Protocol as a strategic lead. After that, I left to co-found Alpha Finance Lab with Nipun Pitimanaaree. Throughout my career, I have been interested in technology and finance, so after realizing that the industry needed to capture some market gaps before entering the next stage of development, I focused on DeFi for a long time before founding Alpha Finance Lab.

Alpha Finance Lab is building an ecosystem of DeFi products that will work together to maximize user returns while minimizing risks.

Alpha products focus on capturing unmet needs in DeFi in an innovative and user-friendly way. While each Alpha product addresses a market gap in its respective industry, the various Alpha products will subsequently work together as part of the Alpha ecosystem.

The first Alpha product is Alpha Homora, which is a leveraged liquidity mining product and the focus of this interview.

Investors in Alpha Finance Lab include The Spartan Group, Multicoin Capital, and DeFiance Capital.

Who are your competitors?

Since Alpha Finance Lab is building an ecosystem of DeFi products, the competitors for each product may vary.

Alpha Homora

Alpha Homora is the first protocol to offer leveraged liquidity mining services. While some people compare Alpha Homora to yield aggregators, we believe that both Alpha Homora and yield aggregators will benefit from collaboration. Specifically, yield aggregators can use the leverage features provided by Alpha Homora to enhance their protocol's usage.

AlphaX

AlphaX is a perpetual swap trading product and the second Alpha product (currently in private testnet). However, AlphaX is not directly competing with other perpetual swap trading products, as AlphaX is actually expanding the total addressable market (TAM) of the DeFi niche, targeting anyone participating in DeFi rather than just perpetual swap traders currently trading on centralized exchanges.

Considering these target users, we built AlphaX to incorporate funding into pricing (so DeFi users don’t even need to understand funding rates) and to tokenize leveraged positions (so DeFi users can use these tokens on other DeFi platforms).

What is the story behind Alpha Homora?

Since we are not limited to building products in a specific area but focus on maximizing user returns while minimizing downside risks, we were able to identify two significant market gaps and create an innovative solution to address these issues.

These two market gaps are:

Market Gap 1: Many ETH holders are holding with low deposit rates.

Market Gap 2: Many miners are seeking higher liquidity mining APY.

To capture these two market gaps, we created the first leveraged liquidity mining product in DeFi—Alpha Homora. Since its launch in October 2020, Alpha Homora has demonstrated a strong product-market fit, with a TVL exceeding $600 million. This TVL comes from two user groups:

1. Liquidity mining miners who can achieve higher APY through leveraged mining on Alpha Homora.

2. ETH lenders who can earn high interest by lending ETH on Alpha Homora. The high interest rates come from the borrowing rates of leveraged miners when they open leveraged positions.

Can you tell us more about Alpha Homora v2?

Alpha Homora V2 will further become a leveraged mining protocol in DeFi. With the scalable structure of Alpha Homora v2, through integration and collaboration with major partners like Cream, SushiSwap, Curve, and Balancer, Alpha Homora v2 will gain more user groups and continue to grow as one of the key components in DeFi. Alpha Homora v2 has already passed audits from Quantstamp and Peckshield.

What are the main features and functionalities of Alpha Homora V2?

• Enables leveraged liquidity mining on liquidity pools on Curve, Balancer, SushiSwap, and Uniswap.

• Leveraged miners can utilize various assets, such as ETH, stablecoins, etc.

• For stablecoin leverage, users can open positions up to 9 times.

• Flexible leveraged mining—users can easily borrow multiple assets, implement re-leveraging, and deleverage.

• Alpha Homora V2 will not automatically sell mined tokens for reinvestment, as we want to support the development of partner communities.

• Similar to Alpha Homora V1, users do not need two equally valued tokens to provide liquidity or yield farm.

How does leveraged liquidity mining work in Alpha Homora V2?

Leveraged liquidity mining involves just 4 simple steps:

1. Select a liquidity pool in Alpha Homora V2. Alpha Homora V2 will enable leveraged mining on liquidity pools on Curve, Balancer, SushiSwap, and Uniswap.

2. Provide any 2 tokens for that pool. For example, when leveraging liquidity mining on the ETH/USDT pool on SushiSwap, you can provide just ETH or USDT, or both.

3. Input the leverage level at which to borrow assets; you can borrow multiple assets. In the example below, you can choose to borrow ETH or USDT.

4. Finally, confirm the strategy. After that, Alpha Homora will handle everything for you.

What is the "Iron Bank" in Alpha Homora v2?

To enable Alpha Homora v2 users to utilize many assets, not just ETH from Alpha Homora v1, without having to add liquidity for all assets themselves, we partnered with Cream v2 and deeply integrated it as a source of liquidity. Specifically, Alpha Homora v2 can borrow from Cream v2 in an under-collateralized manner (Cream refers to this as Iron Bank). This integration not only provides a more efficient borrowing method but also represents the first instance of enterprise lending and under-collateralized borrowing between smart contracts in DeFi.

What are your future goals?

In addition to Alpha Homora v2 and AlphaX, we will also create more Alpha products this year. For each Alpha product, we will continue to refine it until we find the product-market fit, improve the conversion rate of product usage, and provide value accumulation for ALPHA token holders.

Moreover, our goal is to have more integrations between Alpha products to build a robust Alpha ecosystem that helps users maximize returns while minimizing downside risks.

What are your thoughts on the future of the DeFi market?

In 2021, we will continue to see more growth in the AMM space. As AMMs grow, the risks of impermanent loss will become more pronounced. While others may see this as a hurdle, we view it as an opportunity to create another Alpha product to address this market gap. In fact, the third Alpha product is currently in the early stages of product development, aiming to minimize the impermanent loss risk for DeFi users.

The second trend and opportunity I see is the growth of the on-chain derivatives market. In 2020, the main components of the financial system were established, such as decentralized spot trading platforms, lending platforms, and synthetic assets. These foundational elements will serve as the basis for DeFi to enter its next growth phase, which will be driven by the derivatives market, significantly larger than the spot market. At Alpha Finance Lab, we hope to capture this significant demand and trend through AlphaX.